SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark one)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
    OF 1934
    For the fiscal year ended December 31, 2000 or
                              -----------------


TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES  EXCHANGE
ACT   OF   1934   For   the   transition   period    from_________________    to
__________________

Commission file number I-91
                       ----


                     Furniture Brands International, Inc.
-------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

         Delaware                                     43-0337683
-------------------------------                ---------------------------
(State or other jurisdiction of                    (I.R.S. Employer
 incorporation or organization)                     Identification No.)

101 South Hanley Road, St. Louis, Missouri               63105
------------------------------------------     ---------------------------
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code      314/863-1100
                                                        -------------


        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                                      Name of each exchange on
           Title of each class                            which registered
           -------------------                        ------------------------
     Common Stock - $1.00 Stated Value                New York Stock Exchange
    with Preferred Stock Purchase Rights

        SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                                   None
--------------------------------------------------------------------------------
                               (Title of Class)

                  Indicate by check mark  whether the  registrant  (1) has filed
all  reports  required  to be filed  by  Section  13 or 15(d) of the  Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days. Yes x No

                  Indicate  by check mark if  disclosure  of  delinquent  filers
pursuant to Item 405 of Regulation S-K is not contained herein,  and will not be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K [ ]

                  The  aggregate  market  value  of the  voting  stock  held  by
non-affiliates  of the  registrant  as of February 28, 2001,  was  approximately
$1,226,537,174.


<PAGE>



                  Indicate  the  number  of  shares  outstanding  of each of the
registrant's classes of common stock, as of the latest practicable date.

                   50,207,425 shares as of February 28, 2001

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of Definitive Proxy Statement for Annual Meeting
         of Stockholders on April 26, 2001 ................... Part III



<PAGE>




                                     PART I
                                     ------

Item 1. Business
----------------

(a)  General Development of Business

On January 10, 2000, Thomasville Furniture Industries,  Inc. announced a license
agreement with Harrods  Department Store, under which Highland House, a division
of Thomasville,  will design and manufacture the Harrods Of  Knightsbridge  Fine
Furniture Collection.

(c)  Narrative Description of Business

The Company,  one of the largest  manufacturers of residential  furniture in the
United States,  markets its products  through its three operating  subsidiaries:
Broyhill Furniture Industries, Inc.; Lane Furniture Industries, Inc.; and
Thomasville Furniture Industries, Inc.

PRODUCTS
--------

The Company manufactures and distributes (i) case goods,  consisting of bedroom,
dining room and living room  furniture,  (ii)  stationary  upholstery  products,
consisting  of  sofas,  loveseats,   sectionals  and  chairs,  (iii)  occasional
furniture,  consisting of wood tables, accent pieces, home entertainment centers
and home office furniture, and (iv) recliners, motion furniture and sleep sofas.
The  Company's  brand name  positioning  by price and product  category is shown
below.
<TABLE>
<CAPTION>

                                                                                      UPHOLSTERY
                                                                           --------------------------------
                                                                                                  RECLINER/
PRICING CATEGORY                  CASE GOODS          OCCASIONAL           STATIONARY             MOTION
----------------                  ----------          ----------           ----------             ---------

<S>                               <C>                    <C>                  <C>                    <C>
PREMIUM                          Thomasville          Thomasville          Thomasville

BEST                             Thomasville          Thomasville          Thomasville            Thomasville
                                 Lane                 Lane                 Lane                   Lane
                                 Broyhill             Broyhill             Broyhill               Broyhill

BETTER                           Lane                 Lane                 Lane                   Lane
                                 Broyhill             Broyhill             Broyhill               Broyhill

GOOD                             Broyhill             Broyhill             Broyhill               Broyhill
                                 Lane                                                             Lane

PROMOTIONAL                      Founders

RTA                              Creative Interiors

</TABLE>

BROYHILL FURNITURE INDUSTRIES

Broyhill produces collections of medium-priced  bedroom,  dining room and living
area  furniture  aimed at  middle-income  consumers.  Broyhill's  wood furniture
offerings consist of bedroom, dining room and living room furniture,  occasional
tables,  accent items,  free-standing home entertainment centers and home office
furniture.   Upholstered   products  include  sofas,  sleep  sofas,   loveseats,
sectionals,  chairs,  and fully reclining  furniture all offered in a variety of
fabrics and leathers.  Broyhill's residential furniture divisions produce a wide
range  of  furnishings  in  country,  traditional,  European,  contemporary  and
lifestyle designs.

The  widely  recognized   Broyhill  trademarks  include  Broyhill  and  Broyhill
Signature  Series.  The flagship  Broyhill product line concentrates on bedroom,
dining room,  upholstered and occasional  furniture  designed for the "good" and
"better" price categories.  The Broyhill Signature Series product line enjoys an
excellent  reputation  for highly  styled case goods  collections  in the "best"
price category.


<PAGE>



LANE FURNITURE INDUSTRIES

Lane manufactures and markets a broad range of high quality furniture  targeting
the "good",  "better" and "best" price  categories.  Lane targets  niche markets
with its three operating  divisions,  which  participate in such segments of the
residential  furniture market as motion furniture,  wicker and rattan, and cedar
chests.

Action Industries manufactures and markets reclining chairs and motion furniture
in the "good,"  "better" and "best" price  categories under the Lane brand name.
Motion  furniture  consists of sofas and loveseats  with  recliner-style  moving
parts and comfort  features,  wall saver recliners,  pad-over chaise  recliners,
hi-leg recliners,  sleep sofas and motion sectionals.  Royal Development Company
designs and  manufactures  the mechanisms used in Action  Industries'  reclining
furniture products.

In March of 1999,  Action introduced the Lane Leather  collection.  Lane Leather
represents  an  important  source of growth as  leather  is the  fastest-growing
category in upholstered furniture. The collection, priced in the "best" category
comes  in  three  styles  -  American  Ranch,  American  Traditional  and  Urban
Contemporary.

Lane  Division  manufactures  and sells cedar chests,  living room,  bedroom and
dining room furniture, wall systems, desks, console tables and mirrors and other
occasional  wood  pieces.  Lane  Division  furniture is sold in the "better" and
"best" price categories.

Laneventure manufactures and markets moderately priced wicker, rattan and bamboo
furniture,   tables,  occasional  wood  pieces  and  two  lines  of  upholstered
furniture.  One  line  is  comprised  of  contemporary  and  modern  upholstered
furniture and metal and glass occasional and dining tables,  and the other which
is comprised of traditional and contemporary  upholstered  furniture,  primarily
sofas, loveseats, chairs and ottomans. Laneventure also manufactures outdoor and
patio  furniture  featuring  fast drying  upholstered  cushions  under the names
WeatherMaster  and  Weathercraft,  which  have  developed  significant  consumer
acceptance.  In 1999 Laneventure  entered two new markets - exposed aluminum and
teak.

THOMASVILLE FURNITURE INDUSTRIES

Thomasville  manufactures and markets wood furniture,  upholstered  products and
promotional/RTA furniture.  Thomasville markets its products primarily under the
Thomasville brand name.  Thomasville offers an assortment of upholstery and wood
under one brand name that  targets the "best" and  "premium"  price  categories.
Upholstery is primarily  marketed in three major styles:  traditional,  American
traditional/country  and  casual/lifestyle  contemporary.  Upholstery  style  is
determined  by both frame style and fabric or leather  selection.  Thomasville's
frame assortment  allows the consumer to select from a wide variety of different
styles  within  the  general  style  categories,  and  as  much  as  45%  of the
Thomasville  fabric and leather offering changes in a 12 month period,  insuring
that the latest colors and textures are  available.  Wood furniture is primarily
marketed in four major  styles:  American  traditional/  country,  18th century,
European traditional and casual contemporary.

Hickory  Chair  manufactures  and  markets  traditional  styles  of  upholstered
furniture,  dining  room  collections  and  occasional  tables in the "best" and
"premium"  price  categories.  The Hickory Chair division has been crafting fine
reproductions of 18th century furniture for over 80 years. For example,  Hickory
Chair offers the James River  collection  which features  reproductions  of fine
furnishings from Virginia  plantations,  and the Mount Vernon collection,  which
features  reproductions  from  George  Washington's  home.  In  October of 1999,
Hickory  Chair  introduced  its  Thomas  O'Brien   collection,   which  includes
upholstery,  chairs,  tables,  beds and cabinetry in O'Brien's  acclaimed  "warm
modernist"  style.  Hickory Chair also  introduced  Grand Vista, a collection of
larger  scale,  casual  reproductions  from the  Museum of Santa Fe and  William
Poole, a collection of case goods and upholstery.

Pearson has been  manufacturing and selling  contemporary and traditional styles
of finely tailored upholstered furniture including sofas, loveseats,  chairs and
ottomans  for over 50 years.  Pearson  furniture  sells in the  "premium"  price
category and is distributed to high-end furniture stores and interior designers.

HBF manufactures and sells a line of office furniture, including chairs, tables,
conference tables, desks and credenzas, in the upper-medium price range.

Highland  House  manufactures  upholstered  products in the  "better" and "best"
price  categories.  During 1999,  Highland House  introduced the Rue de Provence
collection  of  Provencal  French  bedroom  pieces,   occasional  furniture  and
upholstery  pieces that use unique fabric  selections  supplied  exclusively  to
Highland House from southern France.

Founders offers assembled bedroom sets, bookcases and home entertainment centers
under the  Founders  brand name to a variety of  retailers  for sale to consumer
end-users  and  certain  contract  customers.  Creative  Interiors  markets  RTA
(ready-to-assemble)  furniture such as home  entertainment  centers,  bookcases,
bedroom and  kitchen/utility  furniture  and  computer  desks under the Creative
Interiors brand name.

DISTRIBUTION

The  Company's  strategy of  targeting  diverse  distribution  channels  such as
furniture  centers,  independent  dealers,  national  and  local  chain  stores,
department  stores,  specialty  stores and  decorator  showrooms is supported by
dedicated sales forces covering each of these distribution channels. The Company
continues  to  explore  opportunities  to  expand  international  sales  and  to
distribute through non-traditional  channels such as wholesale clubs and catalog
retailers.

The Company's breadth of product and national scope of distribution enable it to
effectively  service national retailers such as J.C. Penney and HomeLife and key
regional retailers such as Havertys,  Breuner's and Kittle's.  The consolidation
of the retail  residential  furniture  industry has made access to  distribution
channels an important competitive  advantage for manufacturers.  The Company has
developed dedicated  distribution  channels by expanding its gallery program and
the network of independent  dealer-owned  dedicated  retail  locations,  such as
Thomasville  Home  Furnishings  Stores.  The Company  distributes  its  products
through  a  diverse  network  of  independently-owned  retail  locations,  which
includes 137 free-standing stores, 1,522 galleries and 572 furniture centers.

Haverty  Furniture  Companies,  Inc.  and the  Company  have  formed a strategic
alliance whereby Havertys will allocate up to one-half of the retail floor space
in all of its stores to the  prominent  display of product  manufactured  by the
Company. This alliance advances the Company's strategy of expanding distribution
and dedicated display space.

In February of 1999, the Company and Benchmark Home Furnishings,  Inc. announced
a cooperative  effort to develop a 160,000 square foot Benchmark store in Kansas
City dedicated exclusively to products manufactured by the Company.

In February of 1999, the Company and Kittle's Home Furnishings, Inc. announced a
strategic  alliance  whereby  Kittle's  has agreed to expand its  commitment  to
products manufactured by the Company.

Broyhill,  Lane  and  Thomasville  have  all  developed  gallery  programs  with
dedicated  dealers  displaying  furniture  in  complete  room  ensembles.  These
retailers  employ a consistent  showcase  gallery concept  wherein  products are
displayed  in  complete  and fully  accessorized  room  settings  instead  of as
individual pieces. This presentation format encourages  consumers to purchase an
entire  room  of  furniture   instead  of  individual   pieces  from   different
manufacturers.  The Company offers substantial  services to retailers to support
their   marketing   efforts,   including   coordinated   national   advertising,
merchandising and display programs and extensive dealer training.

Thomasville  Home  Furnishings  Stores are  dealer-owned,  free-standing  retail
locations that exclusively feature Thomasville  furniture.  The Company believes
distributing its products through  dedicated,  free-standing  stores strengthens
brand  awareness,   provides  well-informed  and  focused  sales  personnel  and
encourages the purchase of multiple items per visit.

Showrooms for the national  furniture market are located in Thomasville and High
Point,  North Carolina and for regional  markets in Atlanta,  Georgia;  Chicago,
Illinois; Tupelo, Mississippi; and San Francisco, California.

BROYHILL FURNITURE INDUSTRIES

One of  Broyhill's  principal  distribution  channels is the  Broyhill  Showcase
Gallery  program.  This  program,  started in 1983,  involves  335  domestic and
international  participating  dealer  locations.  Each  dealer  in the  Broyhill
Showcase Gallery program owns the gallery and the Broyhill furniture  inventory.
The  program  incorporates  a core  merchandise  program,  advertising  material
support,  in-store  merchandising  events and educational  opportunities for the
retail  store sales and  management  personnel.  The average  Broyhill  Showcase
Gallery consists of 7,500 square feet of dedicated  display space.  Furniture is
displayed  in  complete  and fully  accessorized  room  settings  instead  of as
individual pieces.

For the retailer  that is currently not a  participant  in the gallery  program,
Broyhill offers the Independent Dealer Program. This concept, initiated in 1987,
is  designed to  strengthen  Broyhill's  relationship  with these  retailers  by
assisting them in overcoming some of the significant  difficulties in running an
independent  furniture  business.  Participating  retailers  in the  Independent
Dealer Program commit to a minimum,  pre-selected lineup of Broyhill merchandise
and, in return,  receive a detailed,  step-by-step,  year-round  advertising and
merchandising  plan.  The program  includes  three major sales  events per year,
monthly   promotional  themes  and  professionally   prepared   advertising  and
promotional  materials  at  nominal  cost in  order  to help  increase  consumer
recognition  on the local  level.  As part of the  Independent  Dealer  Program,
Broyhill offers the Broyhill Furniture Center Program to 572 retailers that have
committed at least 2,000 square feet exclusively to Broyhill  products  arranged
in gallery-type room settings.  This program includes all of the benefits of the
Independent Dealer Program,  plus additional  marketing,  design and advertising
assistance.  The Company  seeks to develop these  relationships  so that some of
these  retailers may eventually  become  participants  in the Broyhill  Showcase
Gallery program.

LANE FURNITURE INDUSTRIES

Lane  distributes  its products  nationally and  internationally  through a well
established  network  of  approximately  16,000  retail  locations.   A  diverse
distribution  network is utilized in keeping  with Lane's  strategy of supplying
customers  with highly  specialized  products in selected  niche  markets.  This
distribution  network  primarily  consists  of  independent   furniture  stores,
regional  chains such as Havertys and Art Van, and  department  store  companies
such as J.C.  Penney,  HomeLife,  May Department  Stores,  Federated  Department
Stores and Dillard Department Stores.

Lane  has  established  specialty  gallery  programs  with  1,001  participating
dealers.  This includes 282 dealer-owned Comfort Showcase Galleries  established
by Action Industries. The Comfort Showcase Galleries average approximately 4,200
square feet of retail space specifically dedicated to the display, promotion and
sale of Action  Industries'  products.  Lane's other gallery programs consist of
Laneventure Raymond Waites Galleries and 608 Cedar Chest Boutiques.

THOMASVILLE FURNITURE INDUSTRIES

Thomasville  products are offered at 674  independently-owned  retail locations,
including 226 Thomasville Galleries, 137 Thomasville Home Furnishings Stores and
311 authorized  dealers.  The Thomasville Gallery concept was initiated in 1983.
Thomasville  Galleries  have  an  average  7,500  square  feet of  retail  space
specifically  dedicated  to the  display,  promotion  and  sale  of  Thomasville
products.  The first  Thomasville  Home  Furnishings  Store opened in 1988.  The
typical   Thomasville   Home   Furnishings   Store  is  a  15,000   square  foot
independently-owned  store  offering  a broad  range  of  Thomasville  products,
presented in a home-like setting by specially trained salespersons.

Pearson distributes its products primarily through  premium-quality  dealers and
the   interior   design   trade.   Hickory   Chair  also   distributes   through
premium-quality dealers including 20 gallery locations.

Thomasville's  Founders  division  sells  promotional  furniture to a variety of
retailers  for  sale to  consumer  end-users  and  certain  contract  customers.
Promotional  furniture is sold to retail  chains such as Value City,  as well as
independent  furniture  stores.  Promotional  furniture  is  also  sold  in  the
hospitality  and  health  care  markets  of  Thomasville's   contract  business.
Thomasville's Creative Interiors division sells RTA furniture to customers which
include national chains such as Wal-Mart and Target, catalog showrooms, discount
mass merchandisers, warehouse clubs and home furnishings retailers.

MARKETING AND ADVERTISING

Advertising is used to increase consumer  awareness of the Company's brand names
and is targeted to specific  consumer  segments  through  national  and regional
television as well as leading shelter and other popular magazines such as Better
Homes and Gardens,  People and Good  Housekeeping.  Each operating  company uses
focused  advertising in major markets to create buying  urgency around  specific
sale events and to provide dealer location information, enabling retailers to be
listed jointly in advertisements for maximum  advertising  efficiency and shared
costs.   The  Company  seeks  to  increase   consumer   buying  and   strengthen
relationships  with  retailers  through  cooperative  advertising  and selective
promotional  programs.  The  Company  focuses  its  marketing  efforts  on prime
potential  consumers  utilizing  information  from databases and from callers to
each operating company's toll-free telephone number.

BROYHILL FURNITURE INDUSTRIES

Broyhill's  advertising  programs  focus  on  translating  its  strong  consumer
awareness into increased sales.  Broyhill's  current marketing strategy features
national television  advertising,  in addition to its national print advertising
program and traditional  promotional  programs such as furniture  "giveaways" on
television game shows and  dealer-based  promotions such as product mailings and
brochures.  The national print advertising program, which consists of multi-page
layouts,  is  designed  to  appeal  to  the  consumer's  desire  for  decorating
assistance  and  increased  confidence  in making the decision to purchase a big
ticket product such as furniture.  These  advertisements are run in publications
such as  Good  Housekeeping  and  Better  Homes  and  Gardens  which  appeal  to
Broyhill's  consumer  base.  Game  show  promotions,  a  long-standing  Broyhill
tradition,  include  popular  programs such as Wheel of Fortune and The Price is
Right. An extensive public relations  campaign also exposes Broyhill products in
leading magazine and newspaper editorial features.

LANE FURNITURE INDUSTRIES

Lane's  marketing  approach  reflects the  diversity  of its various  divisions.
Action Industries employs an integrated  marketing/advertising strategy in which
it coordinates  magazine,  newspaper,  circular and television  advertising with
other marketing  programs to promote a single product.  The other Lane divisions
began using television advertising in 1998. These commercials featured the Eddie
Bauer  Lifestyles  by  Lane  collection,  produced  by  the  Lane  Division  and
Laneventure.  Each of the Lane  divisions  advertises  extensively  in trade and
consumer publications targeting various niche markets.

THOMASVILLE FURNITURE INDUSTRIES

Thomasville's   current  advertising  appears  in  national  network  and  cable
television  commercials during peak promotional periods. The campaign emphasizes
Thomasville   fashion  and  quality  leadership  through  the  use  of  dramatic
commercials  featuring  individual,  high  quality wood and  upholstery  pieces.
National cable networks  include A&E, The Discovery  Channel,  CNN, CNN Headline
News,  The  Weather  Channel,  TNN,  Nickelodeon,  The Travel  Channel,  TBS and
Entertainment Network.

To help retailers sell its products through to consumers,  Thomasville  offers a
full twelve month  schedule of promotional  support which  includes  promotional
concepts,  selected  product  discounts,  cooperative  advertising  funds, and a
complete  advertising  package  with  color  newspaper  layouts  plus  radio and
television  commercials  dealers can use as supplied.  Thomasville runs national
sale events to coincide with major  industry sale periods.  These events include
national print ads or Thomasville-designed newspaper inserts for dealer use.

MANUFACTURING

Broyhill operates 18 finished case goods and upholstery production and warehouse
facilities totalling over 5.3 million square feet. All finished goods plants are
located  in  North  Carolina.  Broyhill  pioneered  the use of  mass  production
techniques in the furniture  industry and by utilizing  longer  production  runs
achieves economies of scale.

Lane operates 11 finished  case goods and  upholstery  production  and warehouse
facilities  in  Mississippi,  North  Carolina  and Virginia  totalling  over 4.9
million square feet. Since the late 1980s, significant capital expenditures have
been made to acquire technologically  advanced manufacturing equipment which has
increased factory productivity as well as capacity.

Thomasville manufactures or assembles its products at 21 finished case goods and
upholstery  production  and  warehouse  facilities  located  in North  Carolina,
Virginia,  and Tennessee  totalling over 7.1 million square feet.  Each plant is
specialized,  manufacturing premium furniture products,  allowing more efficient
production runs while maintaining high quality standards.

The  manufacturing  process for  Thomasville's  Creative  Interiors  division is
highly automated. Large fiberboard and particleboard sheets are machine-finished
in long  production  runs,  then  stored  and held  for  assembly  using  highly
automated  assembly  lines.  Completed  goods are flat  packed  and stored in an
automated warehouse to provide quicker delivery to customers.  Ninety percent of
Creative Interiors products are shipped within 14 days of production.

RAW MATERIALS AND SUPPLIERS

The raw  materials  used by the Company in  manufacturing  its products  include
lumber, veneers, plywood, fiberboard, particleboard, paper, hardware, adhesives,
finishing materials,  glass, mirrored glass,  fabrics,  leathers and upholstered
filling  material  (such as  synthetic  fibers,  foam  padding and  polyurethane
cushioning).  The various types of wood used in the Company's  products  include
cherry,  oak,  maple,  pine and pecan,  which are  purchased  domestically,  and
mahogany,  which is purchased abroad. Fabrics,  leathers and other raw materials
are purchased both domestically and abroad.  Management believes that its supply
sources for those materials are adequate.

On February 26, 1999, the Company and Outlook  International,  Ltd. announced an
agreement in which Outlook will act as exclusive  representative for the Company
for the manufacture of products in the Far East.

Other than Outlook International,  the Company has no long-term supply contracts
and the  Company has  experienced  no  significant  problems  in  supplying  its
operations.  Although the Company has  strategically  selected  suppliers of raw
materials,  the  Company  believes  that  there  are a number  of other  sources
available,  contributing  to its ability to obtain  competitive  pricing for raw
materials.  Raw materials prices fluctuate over time depending upon factors such
as supply, demand and weather.  Increases in prices may have a short-term impact
on the Company's margins for its products.

The  majority  of  supplies  for  promotional  and RTA  products  are  purchased
domestically,   although  paper  and  certain  hardware  is  purchased   abroad.
Management  believes,  however,  that its  proximity to and  relationships  with
suppliers are advantageous for the sourcing of such materials.  In addition,  by
combining the purchase of various raw materials (such as foam, cartons,  springs
and fabric) and services,  Broyhill,  Lane,  and  Thomasville  have been able to
realize cost savings.

ENVIRONMENTAL MATTERS

The  Company is subject to a  wide-range  of  federal,  state and local laws and
regulations relating to protection of the environment,  worker health and safety
and the  emission,  discharge,  storage,  treatment  and  disposal of  hazardous
materials.  These  laws  include  the Clean  Air Act of 1970,  as  amended,  the
Resource  Conservation and Recovery Act, the Federal Water Pollution Control Act
and the Comprehensive  Environmental,  Response,  Compensation and Liability Act
("Superfund").  Certain  of the  Company's  operations  use  glues  and  coating
materials that contain  chemicals that are  considered  hazardous  under various
environmental  laws.  Accordingly,  management  closely  monitors the  Company's
environmental  performance  at all of its  facilities.  Management  believes the
Company is in substantial  compliance  with all  environmental  laws.  While the
Company may be required to make capital investments at some of its facilities to
ensure compliance,  the Company believes it will continue to meet all applicable
requirements  in a timely  fashion and that the amount of money required to meet
these  requirements  will not materially  affect its financial  condition or its
results of operations.

The Company has been identified as a potentially  responsible party ("PRP") at a
number of superfund  sites. The Company believes that its liability with respect
to  most  of  the  sites  is  de  minimis,   and  the  Company  is  entitled  to
indemnification by others with respect to liability at certain sites. Management
believes that any liability as a PRP with regard to the superfund sites will not
have a  material  adverse  effect  on the  financial  condition  or  results  of
operations of the Company.

COMPETITION

The  furniture  manufacturing  industry  is highly  competitive.  The  Company's
products  compete with  products  made by a number of  furniture  manufacturers,
including  La-Z-Boy  Incorporated,  Lifestyle  Furnishings  International  Ltd.,
Bassett Furniture Industries,  Inc., and Ethan Allen Interiors,  Inc. as well as
approximately  600  smaller  producers.  The  elements  of  competition  include
pricing, styling, quality and marketing.

EMPLOYEES

As of December 31, 2000, the Company employed  approximately 20,700 people. None
of the Company's employees is represented by a union.

BACKLOG

The combined  backlog of the  Company's  operating  companies as of December 31,
2000  aggregated  approximately  $178 million,  compared to  approximately  $206
million as of December 31, 1999.


<PAGE>




Item 2.  Properties
-------  ----------

The  Company  owns  or  leases  the  following  principal  plants,  offices  and
warehouses:

<TABLE>
<CAPTION>

                                                                                       Floor          Owned
                                                     Type of                           Space           or
Division              Location                       Facility                        (Sq. Ft.)        Leased
--------              --------                       --------                        ---------        ------
<S>                     <C>                            <C>                               <C>           <C>
Furniture
  Brands              St. Louis, MO                  Headquarters                       26,800        Leased

Broyhill              Lenoir, NC                     Headquarters                      136,000        Owned

Broyhill              Lenoir, NC                     Plant/Warehouse                   312,632        Owned

Broyhill              Newton, NC                     Plant/Warehouse                   382,626        Owned

Broyhill              Lenoir, NC                     Plant/Warehouse                   628,000        Owned

Broyhill              Rutherfordton, NC              Plant/Warehouse                   575,656        Owned

Broyhill              Lenoir, NC                     Plant/Warehouse                   419,000        Owned

Broyhill              Lenoir, NC                     Plant/Warehouse                   390,020        Owned/
                                                                                                        Leased

Broyhill              Rutherfordton, NC              Plant/Warehouse                   433,597        Owned

Broyhill              Conover, NC                    Plant/Warehouse                   316,542        Owned

Broyhill              Lenoir, NC                     Plant/Warehouse                   516,439        Owned

Broyhill              Lenoir, NC                     Plant/Warehouse                   256,318        Owned

Broyhill              Lenoir, NC                     Plant                              56,250        Owned

Broyhill              Lenoir, NC                     Plant/Warehouse                   252,380        Owned

Broyhill              Taylorsville, NC               Plant/Warehouse                   212,754        Owned

Broyhill              Lenoir, NC                     Plant                             124,700        Owned

Broyhill              Marion, NC                     Plant                              22,712        Owned

Broyhill              Lenoir, NC                     Warehouse                          96,000        Owned

Broyhill              Lenoir, NC                     Warehouse                         252,250        Leased

Broyhill              Lenoir, NC                     Warehouse                         124,200        Leased

Lane                  Altavista, VA                  Plant/Warehouse                 1,091,600        Owned

Lane                  Altavista, VA                  Headquarters                       62,000        Owned

Lane                  Conover, NC                    Plant/Warehouse                   348,180        Owned

Lane                  Conover, NC                    Plant                             345,130        Owned

Lane                  Rocky Mount, VA                Plant/Warehouse                   598,962        Owned

Lane                  Rocky Mount, VA                Plant                              50,300        Owned
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                                                                                       Floor          Owned
                                                     Type of                           Space           or
Division              Location                       Facility                        (Sq. Ft.)        Leased
--------              --------                       --------                        ---------        ------
<S>                      <C>                          <C>                                <C>            <C>
Lane                  High Point, NC                 Plant                             187,162        Owned

Lane                  Pontotoc, MS                   Plant/Warehouse                   358,652        Owned

Lane                  Verona, MS                     Plant/Warehouse                   410,000        Owned

Lane                  Saltillo, MS                   Plant/Warehouse                   570,328        Owned

Lane                  Tupelo, MS                     Plant/Warehouse                   712,675        Owned

Lane                  Tupelo, MS                     Warehouse                         249,000        Owned

Thomasville           Thomasville, NC                Headquarters/                     256,000        Owned
                                                         Showroom

Thomasville           Thomasville, NC                Plant/Warehouse                   373,000        Owned

Thomasville           Thomasville, NC                Plant                             240,000        Owned

Thomasville           Thomasville, NC                Plant                             325,000        Owned

Thomasville           Thomasville, NC                Plant                             309,850        Owned

Thomasville           Lenoir, NC                     Plant/Warehouse                   828,000        Owned

Thomasville           Winston-Salem, NC              Plant/Warehouse                   706,000        Owned

Thomasville           West Jefferson, NC             Plant/Warehouse                   223,545        Owned

Thomasville           Johnson City, TN               Plant/Warehouse                   284,120        Owned

Thomasville           Statesville, NC                Plant                             158,600        Owned

Thomasville           Troutman, NC                   Plant                             238,200        Owned

Thomasville           Conover, NC                    Plant                             123,200        Owned

Thomasville           Hickory, NC                    Plant                              58,700        Owned

Thomasville           Hickory, NC                    Plant                              98,700        Owned

Thomasville           Thomasville, NC                Warehouse                         731,000        Owned

Thomasville           Appomattox, VA                 Plant/Warehouse                   829,800        Owned

Thomasville           Carysbrook, VA                 Plant                             189,000        Owned

Thomasville           Hickory, NC                    Plant/Warehouse                   209,800        Leased

Thomasville           Conover, NC                    Plant/Warehouse                   260,000        Owned

Thomasville           Hickory, NC                    Plant/Warehouse                   555,511        Owned

Thomasville           Hickory, NC                    Plant/Warehouse                   211,391        Owned

Thomasville           High Point, NC                 Plant/Warehouse                   178,500        Owned

--------------------------
</TABLE>

The Tupelo,  Mississippi  facility is  encumbered  by a mortgage  and first lien
securing industrial revenue bonds.

The Company believes its properties are generally well maintained,  suitable for
its  present  operations  and  adequate  for  current  production  requirements.
Productive  capacity and extent of utilization  of the Company's  facilities are
difficult  to  quantify  with  certainty  because  in any one  facility  maximum
capacity and utilization varies periodically  depending upon the product that is
being  manufactured,  the degree of automation and the  utilization of the labor
force in the facility.  In this context,  the Company estimates that overall its
production  facilities were effectively utilized during 2000 at moderate to high
levels of productive  capacity and believes that in conjunction  with its import
capabilities the Company's facilities have the capacity, if necessary, to expand
production to meet anticipated product requirements.

Item 3.  Legal Proceedings
--------------------------

The  Company is or may become a defendant  in a number of pending or  threatened
legal  proceedings  in the  ordinary  course  of  business.  In the  opinion  of
management,  the  ultimate  liability,  if any,  of the  Company  from  all such
proceedings  will not  have a  material  adverse  effect  upon the  consolidated
financial position or results of operations of the Company and its subsidiaries.

The Company is also subject to regulation regarding  environmental  matters, and
is a party  to  certain  actions  related  thereto.  For  information  regarding
environmental matters, see "Item 1. Business -- Environmental Matters."

Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

Not applicable.


<PAGE>


                                     PART II
                                     -------

Item 5.  Market for The Registrant's Common Equity and Related Stockholder
---------------------------------------------------------------------------
Matters
-------

As of February 28, 2001,  there were  approximately  2,100  holders of record of
Common Stock.

Shares of the Company's  Common Stock are traded on the New York Stock Exchange.
The reported high and low sale prices for the Company's  Common Stock on the New
York  Stock  Exchange  is  included  in  Note 11 to the  consolidated  financial
statements of the Company.

The Company has not paid cash dividends on its Common Stock during the two years
ended December 31, 1999 and 2000.


<PAGE>
<TABLE>
<CAPTION>
Item 6.  Selected Financial Data


                                       FIVE-YEAR CONSOLIDATED FINANCIAL REVIEW

--------------------------------------------------------------------------------------------------------
(Dollars in thousands                                         Year Ended December 31,
except per share data)                  ----------------------------------------------------------------
                                        2000           1999        1998        1997         1996
--------------------------------------------------------------------------------------------------------
Summary of operations:
<S>                                   <C>           <C>         <C>         <C>          <C>
  Net sales                           $ 2,116,239   $2,088,112  $1,960,250  $1,808,276   $1,696,795
  Gross profit                            546,859      550,312     515,512     450,690      431,473
  Interest expense                         36,389       37,577      43,455      42,747       45,217
  Earnings before income tax
    expense and extraordinary             165,997      176,764     152,143     107,254       88,292
  Income tax expense                       57,574       64,854      54,205      40,201       34,070
  Earnings before extraordinary item      108,423      111,910      97,938      67,053       54,222
  Extraordinary item                       (2,522)        --          --          --         (7,417)
  Net earnings                        $   105,901b  $  111,910  $   97,938a  $  67,053   $   46,805

Per share of common stock - diluted:
  Earnings before extraordinary item  $      2.15   $     2.14  $     1.82   $    1.15   $     0.88
  Extraordinary item                        (0.05)          --          --          --        (0.12)
  Net earnings                        $      2.10b  $     2.14  $     1.82a  $    1.15   $     0.76

  Weighted average common shares
  - diluted (in thousands)                 50,443       52,335      53,809      58,473       61,946

Other information:
  Working capital                     $   548,463   $  518,036  $  509,148   $ 482,288   $  462,661
  Property, plant and equipment, net      303,235      297,746     293,777     294,061      301,962
  Capital expenditures                     53,310       48,951      44,358      40,004       40,344
  Total assets                          1,304,838    1,288,834   1,303,204   1,257,236    1,269,204
  Long-term debt                          462,000      535,100     589,200     667,800      572,600
  Shareholders' equity                $   583,905   $  474,197  $  413,509   $ 323,322   $  419,657
========================================================================================================
</TABLE>
(a)  Excluding  nonrecurring  gain, net of income tax expense,  net earnings and
     net earnings per common share were $90,077 and $1.67, respectively.

(b)  Excluding   extraordinary  item,  nonrecurring  gain  (cash  dividend)  and
     additional bad debt expense, net of income tax effect, net earnings and net
     earnings per common share were $108,351 and $2.15, respectively.


<PAGE>


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations
-------------

<TABLE>
<CAPTION>

                       OPERATIONS AND FINANCIAL CONDITION

Results of Operations

                  As an aid to understanding the Company's results of operations
on a  comparative  basis,  the  following  table has been  prepared to set forth
certain statements of operations and other data for 2000, 1999, and 1998.

-------------------------------------------------------------------------------------------------------------------------
(Dollars in millions)                                              Year Ended December 31,
                                      -----------------------------------------------------------------------------------
                                                 2000                        1999                        1998
                                      -----------------------------------------------------------------------------------
                                                           % of                        % of                        % of
                                                            Net                         Net                         Net
                                          Dollars         Sales       Dollars         Sales        Dollars        Sales
-------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>         <C>             <C>         <C>             <C>
Net sales                                 $2,116.2        100.0%      $2,088.1        100.0%      $1,960.2        100.0%
Cost of operations                         1,529.9         72.3        1,498.6         71.8        1,406.4         71.7
Selling, general and
  administrative

  expenses                                   335.6         15.9          321.2         15.4          314.8         16.1
Depreciation and
  amortization                                58.1          2.7           56.5          2.7           55.5          2.8
-------------------------------------------------------------------------------------------------------------------------
Earnings from
  operations                                 192.6          9.1          211.8         10.1          183.5          9.4
Interest expense                              36.4          1.7           37.6          1.8           43.5          2.2
Other income, net                              9.8          0.4            2.6          0.1           12.1          0.6
-------------------------------------------------------------------------------------------------------------------------
Earnings before income
  tax expense and
  extraordinary item                         166.0          7.8          176.8          8.5          152.1          7.8
Income tax expense                            57.6          2.7           64.9          3.1           54.2          2.8
-------------------------------------------------------------------------------------------------------------------------
Net earnings before
  extraordinary item                        $108.4          5.1%        $111.9          5.4%       $  97.9          5.0%
=========================================================================================================================
Gross profit 1                              $546.8         25.8%        $550.3         26.4%       $ 515.5         26.3%
=========================================================================================================================

1  The Company believes that gross profit provides useful information  regarding
   a  company's  financial  performance.  Gross  profit has been  calculated  by
   subtracting  cost of operations  and the portion of  depreciation  associated
   with cost of goods sold from net sales.
</TABLE>
<TABLE>
<CAPTION>

   (Dollars in millions)                                                            Year Ended December 31,
                                                                  ------------------------------------------------------------
                                                                                2000                1999                 1998
   ---------------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                 <C>                  <C>
   Net sales                                                                $2,116.2            $2,088.1             $1,960.2
   Cost of operations                                                        1,529.9             1,498.6              1,406.4
   Depreciation (associated with cost of goods sold)                            39.5                39.2                 38.3
   ---------------------------------------------------------------------------------------------------------------------------
   Gross profit                                                               $546.8              $550.3               $515.5
   ===========================================================================================================================
</TABLE>
Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

                  Net sales for 2000 were $2,116.2  million compared to $2,088.1
million in 1999, an increase of $28.1 million or 1.3%. The increase in net sales
was achieved  through the Company's  continuing  strategies of  introducing  new
products, emphasizing brand names and expanding distribution. These efforts were
mitigated in part by a general economic  slowdown in the second half of the year
and the failure of several large customers.

                  Cost of operations for 2000 was $1,529.9  million  compared to
$1,498.6  million  for  1999,  an  increase  of 2.1%.  Cost of  operations  as a
percentage  of net  sales  increased  from  71.8%  for  1999 to  72.3%  for 2000
primarily due to manufacturing  inefficiencies in the second half resulting from
temporary plant shutdowns to balance inventory with incoming orders.


<PAGE>



                  Selling,  general and  administrative  expenses  increased  to
$335.6  million in 2000 from $321.2  million in 1999,  an increase of 4.5%. As a
percentage of net sales, selling,  general and administrative expenses rose from
15.4% in 1999 to 15.9% in 2000  largely due to an  increase in bad debt  expense
associated with the customer failures noted earlier.

                  Depreciation  and  amortization  for  2000 was  $58.1  million
compared  to  $56.5  million  in  1999,  an  increase  of 2.9%.  The  amount  of
depreciation  and amortization  attributed to "fresh-start"  reporting was $13.5
million and $13.2 million in 2000 and 1999, respectively.

                  Interest  expense for 2000 totaled $36.4 million compared with
$37.6 million in 1999. The decrease in interest  expense  reflects the Company's
debt reduction program, partially offset by higher interest rates.

                  Other  income,  net for 2000 totaled $9.8 million  compared to
$2.6  million  for  1999.  For 2000,  other  income  consisted  of  interest  on
short-term  investments of $0.6 million, a cash dividend  (nonrecurring) of $7.6
million received by the Company relating to its minority investment in a company
which leases  exhibition  space to furniture  and accessory  manufacturers,  and
other miscellaneous income and expense items totaling $1.6 million.

                  Income tax expense for 2000 totaled $57.6  million,  producing
an effective tax rate of 34.7%  compared with an effective tax rate of 36.7% for
1999.  The  effective  tax rates for both  periods  were  adversely  impacted by
certain  nondeductible  expenses  incurred  and  provisions  for state and local
income taxes.  The  effective  tax rate for 2000 was  favorably  impacted by the
nontaxable portion of the $7.6 million cash dividend.

                  Net earnings per common share before  extraordinary  item on a
diluted  basis  were $2.15 and $2.14 for 2000 and 1999,  respectively.  Weighted
average  shares used in the  calculation  of net  earnings per common share on a
basic and diluted basis were  49,532,000 and  50,443,000 in 2000,  respectively,
and 50,968,000 and 52,335,000 in 1999, respectively.

                  Gross profit for 2000 was $546.8 million  compared with $550.3
million for 1999, a decrease of 0.6%.  The  decrease in gross  profit  margin to
25.8%  in  2000  from  26.4%  in 1999  was  primarily  due to the  manufacturing
inefficiencies  resulting from the temporary  plant shutdowns in the second half
noted earlier.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

                  Net sales for 1999 were $2,088.1  million compared to $1,960.2
million for 1998,  an increase of $127.9  million or 6.5%.  The  improved  sales
performance for 1999 occurred at each operating  company and ranged,  in varying
degrees,  across all  product  lines.  The  increase  in net sales was  achieved
through continued introductions of new products, emphasis on the Company's brand
names, and expansion of distribution.

                  Cost of operations for 1999 was $1,498.6  million  compared to
$1,406.4  million  for  1998,  an  increase  of 6.6%.  Cost of  operations  as a
percentage of net sales increased from 71.7% for 1998 to 71.8% in 1999 primarily
due to the disposal of low-margin  and  nonproductive  inventories  at less than
normal profit margins,  and to a lesser degree,  from  short-term  manufacturing
inefficiencies  at several  plants  caused by an  evolving  change in case goods
product mix.

                  Selling,  general and  administrative  expenses  increased  to
$321.2  million in 1999 from $314.8  million in 1998,  an increase of 2.0%. As a
percentage of net sales, selling,  general and administrative expenses decreased
from 16.1% for 1998 to 15.4% for 1999  because of continued  tight  control over
expenses.

                  Depreciation  and  amortization  for  1999 was  $56.5  million
compared  to  $55.5  million  in  1998,  an  increase  of 1.8%.  The  amount  of
depreciation  and amortization  attributed to "fresh-start"  reporting was $13.2
million and $13.7 million in 1999 and 1998, respectively.

                  Interest  expense for 1999 totaled $37.6 million compared with
$43.5 million in 1998. The decrease in interest  expense  reflects the Company's
debt reduction program and reduced interest rates.

                  Other  income,  net for 1999 totaled $2.6 million  compared to
$12.1  million for 1998,  which  included a  nonrecurring  cash dividend of $9.4
million. For 1999, other income consisted of interest on short-term  investments
of $0.4 million and other  miscellaneous  income and expense items totaling $2.2
million.

                  Income tax expense for 1999 totaled $64.9  million,  producing
an effective tax rate of 36.7%  compared with an effective tax rate of 35.6% for
1998.  The  effective  tax rates for both  periods  were  adversely  impacted by
certain  nondeductible  expenses  incurred  and  provisions  for state and local
income taxes.  The  effective  tax rate for 1998 was  favorably  impacted by the
nontaxable portion of the $9.4 million cash dividend.

                  Net earnings  per common  share on a diluted  basis were $2.14
and $1.82 for 1999 and 1998,  respectively.  Weighted average shares outstanding
used in the  calculation of net earnings per common share on a basic and diluted
basis were 50,968,000 and 52,335,000 in 1999,  respectively,  and 52,095,000 and
53,809,000 in 1998, respectively.

                  Gross profit for 1999 was $550.3 million  compared with $515.5
million in 1998,  an increase of 6.8%.  The increase in gross  profit  margin to
26.4% in 1999  from  26.3% in 1998 was due to  improved  manufacturing  capacity
utilization,  partially offset by an inventory reduction program and a change in
case goods product mix.

Financial Condition and Liquidity

Liquidity

                  Cash and cash  equivalents  at December 31, 2000 totaled $14.6
million  compared  to $7.4  million at December  31,  1999.  For 2000,  net cash
provided  by  operating  activities  totaled  $132.1  million.  Net cash used by
investing   activities  totaled  $53.0  million.  Net  cash  used  in  financing
activities totaled $71.9 million,  including the net payment of $73.1 million of
long-term debt.

                  Working  capital  was $548.5  million  at  December  31,  2000
compared to $518.0  million at December 31, 1999. The current ratio was 4.8-to-1
at December 31, 2000  compared to 4.4-to-1 at December 31, 1999.  While  working
capital  increased  5.9% from  1999 to 2000,  the  Company's  focus  remains  on
efficient management of individual working capital components.

                  At December 31, 2000,  long-term  debt totaled  $462.0 million
compared to $535.1  million at December 31, 1999.  The decrease in  indebtedness
was funded by cash flow from  operations.  The Company's  debt-to-capitalization
ratio was 44.2% at December 31, 2000 compared to 53.0% at December 31, 1999.

Financing Arrangements

                  On June 7, 2000,  the Company  refinanced  its secured  credit
agreement with a group of financial institutions.  The new credit facility is an
unsecured,  five-year,  revolving  credit  facility  with a commitment of $630.0
million.


<PAGE>



                  The new revolving  credit  facility allows for the issuance of
letters of credit and cash borrowings. Letter of credit outstandings are limited
to no more  than  $150.0  million,  with  cash  borrowings  limited  only by the
facility's maximum availability less letters of credit outstanding.  On December
31, 2000,  there were $446.0  million in cash  borrowings  and $36.0  million in
letters of credit  outstanding,  leaving an excess of $148.0  million  available
under the facility.

                  Cash borrowings under the new credit facility bear interest at
a base rate or at an adjusted  Eurodollar  rate plus an applicable  margin which
varies,  depending  upon the type of loan the Company  executes.  The applicable
margin over the base rate and  Eurodollar  rate is subject to  adjustment  based
upon the  credit  ratings  the  facility  receives  from  Standard  & Poor's and
Moody's.  At December  31, 2000,  loans  outstanding  under the credit  facility
consisted  of $435.0  million  based on the adjusted  Eurodollar  rate and $11.0
million based upon the base rate for a weighted average interest rate of 7.61%.

                  The  Company  believes  that its  revolving  credit  facility,
together with cash generated from operations, will be adequate to meet liquidity
requirements for the foreseeable future.

Other

Market Risk

                  The Company is exposed to market risk from changes in interest
rates.  The  Company's  exposure to interest  rate risk consists of its floating
rate revolving credit facility.

Recently Issued Statements of Financial Accounting Standard

                  In June, 1998 the Financial  Accounting Standards Board issued
Statement of Financial  Accounting  Standards No. 133 (SFAS No. 133) "Accounting
for Derivative  Instruments and Hedging Activities." This statement standardizes
the accounting for derivative  instruments by requiring that an entity recognize
the items as assets and  liabilities in the statement of financial  position and
measure them at fair value.  SFAS No. 133, as amended,  is effective  for fiscal
years  beginning  after June 15, 2000. The Company does not believe the adoption
of this statement will have a material impact on its financial statements.

Forward-Looking Statements

                  The Company herein has made forward-looking  statements within
the meaning of the "safe harbor" provisions of the Private Securities Litigation
Reform  Act  of  1995.  These  forward-looking   statements  include  statements
containing the words "expects," anticipates," "estimates," "believes," and words
of similar import. The Company cautions investors that any such  forward-looking
statements are not guarantees of future performance and that certain factors may
cause  actual  results to differ  materially  from those in the  forward-looking
statements.  Such factors may include:  overall business and economic conditions
and growth in the furniture industry;  changes in customer spending patterns and
demand for home furnishings;  competitive factors,  such as design and marketing
efforts by other  furniture  manufacturers;  pricing  pressures;  success of the
marketing efforts of retailers and the prospects for further customer  failures;
the  Company's  success in  furniture  design and  manufacture;  the  effects of
manufacturing  realignments  and cost savings  programs;  and other risk factors
listing  from  time to time in the  Company's  future  public  releases  and SEC
reports.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

                  The Company is exposed to market risk from changes in interest
rates.  The  Company's  exposure to interest  rate risk consists of its floating
rate  Secured  Credit  agreement.  Interest  rate  swaps are used to reduce  the
Company's exposure to increases in interest rates.


<PAGE>
<TABLE>
<CAPTION>


ITEM 8.  Financial Statements and Supplementary Data
-----------------------------------------------------

                           CONSOLIDATED BALANCE SHEETS

--------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                                       December 31,          December 31,
                                                                                                    2000                  1999
--------------------------------------------------------------------------------------------------------------------------------
Assets
Current assets:

<S>                                                                                           <C>                   <C>
  Cash and cash equivalents                                                                   $   14,606            $    7,409
  Receivables, less allowances of $23,075
    ($19,057 at December 31, 1999)                                                               351,804               345,385
  Inventories (Note 3)                                                                           294,454               285,395
  Prepaid expenses and other current assets                                                       30,717                33,711
--------------------------------------------------------------------------------------------------------------------------------
    Total current assets                                                                         691,581               671,900
Property, plant and equipment:
  Land                                                                                            19,206                18,930
  Buildings and improvements                                                                     226,096               204,177
  Machinery and equipment                                                                        345,040               322,527
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                 590,342               545,634
  Less accumulated depreciation                                                                  287,107               247,888
--------------------------------------------------------------------------------------------------------------------------------
    Net property, plant and equipment                                                            303,235               297,746
Intangible assets (Note 4)                                                                       289,895               303,446
Other assets                                                                                      20,127                15,742
--------------------------------------------------------------------------------------------------------------------------------
                                                                                              $1,304,838            $1,288,834
================================================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable                                                                              $ 65,483            $   73,617
  Accrued employee compensation                                                                   24,822                28,450
  Accrued interest expense                                                                         7,646                 1,762
  Other accrued expenses                                                                          45,167                50,035
--------------------------------------------------------------------------------------------------------------------------------
    Total current liabilities                                                                    143,118               153,864
Long-term debt (Note 5)                                                                          462,000               535,100
Other long-term liabilities                                                                      115,815               125,673

Shareholders' equity:
  Preferred stock, authorized 10,000,000 shares,
    no par value - issued, none
  Common stock, authorized 100,000,000 shares,
    $1.00 stated value - issued 52,277,066
    shares at December 31, 2000 and 1999 (Note 6)                                                 52,277                52,277
  Paid-in capital                                                                                118,360               120,326
  Retained earnings                                                                              462,473               356,572
  Treasury stock at cost
    (2,601,759 shares at December 31, 2000 and
     2,907,059 shares at December 31, 1999)                                                      (49,205)              (54,978)
--------------------------------------------------------------------------------------------------------------------------------
  Total shareholders' equity                                                                     583,905               474,197
--------------------------------------------------------------------------------------------------------------------------------
                                                                                              $1,304,838            $1,288,834
================================================================================================================================

See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                      CONSOLIDATED STATEMENTS OF OPERATIONS

-------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands except per share data)
                                                                                            Year Ended December 31,
                                                                                -----------------------------------------
                                                                                        2000          1999         1998
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>           <C>          <C>
Net sales                                                                        $ 2,116,239   $ 2,088,112  $ 1,960,250

Costs and expenses:

  Cost of operations                                                               1,529,874     1,498,622    1,406,434

  Selling, general and administrative expenses                                       335,596       321,205      314,837

  Depreciation and amortization
    (includes $13,546, $13,155 and $13,670
    related to fair value adjustments)                                                58,155        56,528       55,469
-------------------------------------------------------------------------------------------------------------------------
Earnings from operations                                                             192,614       211,757      183,510

Interest expense                                                                      36,389        37,577       43,455

Other income, net                                                                      9,772         2,584       12,088
-------------------------------------------------------------------------------------------------------------------------
Earnings before income tax expense and
  Extraordinary item                                                                 165,997       176,764      152,143

Income tax expense (Note 7)                                                           57,574        64,854       54,205
-------------------------------------------------------------------------------------------------------------------------
Earnings before extraordinary item                                                   108,423       111,910       97,938
Extraordinary item - early extinguishment
  Of debt, net of income tax benefit (Note 9)                                         (2,522)         --           --
-------------------------------------------------------------------------------------------------------------------------
Net earnings                                                                     $   105,901   $   111,910  $    97,938
=========================================================================================================================
Net earnings per common share - basic (Note 6):

   Earnings before extraordinary item                                            $      2.19   $      2.20  $      1.88
  Extraordinary item - early extinguishment of debt                                    (0.05)         --           --
-------------------------------------------------------------------------------------------------------------------------
Net earnings per common share - basic                                            $      2.14   $      2.20  $      1.88
=========================================================================================================================
Net earnings per common share - diluted (Note 6):

  Earnings before extraordinary item                                             $      2.15   $      2.14  $      1.82
  Extraordinary item - early extinguishment of debt                                    (0.05)         --           --
-------------------------------------------------------------------------------------------------------------------------
Net earnings per common share - diluted                                          $      2.10   $      2.14  $      1.82
=========================================================================================================================

See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                                          CONSOLIDATED STATEMENTS OF CASH FLOWS

------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
                                                                                          Year Ended December 31,
                                                                                ----------------------------------------

                                                                                         2000        1999        1998
------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:

<S>                                                                                 <C>         <C>         <C>
  Net earnings                                                                      $ 105,901   $ 111,910   $  97,938
  Adjustments to reconcile net earnings
    to net cash provided by operating activities:
    Net loss on early extinguishment of debt                                            2,522        --          --
    Depreciation of property, plant and equipment                                      46,095      44,468      43,409
    Amortization of intangible and other assets                                        12,060      12,060      12,060
    Noncash interest and other expense                                                  1,602       2,172       2,107
    Increase in receivables                                                            (6,419)    (21,221)    (30,189)
    (Increase) decrease in inventories                                                 (9,059)     21,987     (20,336)
    Increase in prepaid expenses and
      intangible and other assets                                                      (7,737)     (2,872)     (3,055)
    Increase (decrease) in accounts payable, accrued
      interest expense and other accrued expenses                                      (9,226)    (12,861)     29,704
    Increase (decrease) in net deferred tax liabilities                                (2,788)     (5,390)      2,624
    Decrease in other long-term liabilities                                              (807)     (1,687)     (2,956)
-----------------------------------------------------------------------------------------------------------------------
  Net cash provided by operating activities                                           132,144     148,566     131,306
-------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:

  Proceeds from the disposal of assets                                                    316         451       1,233
  Additions to property, plant and equipment                                          (53,310)    (48,951)    (44,358)
------------------------------------------------------------------------------------------------------------------------
  Net cash used by investing activities                                               (52,994)    (48,500)    (43,125)
------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:

  Payments for debt issuance costs                                                     (2,090)       --        (1,684)
  Additions to long-term debt                                                         486,500        --       218,000
  Payments of long-term debt                                                         (559,600)    (54,100)   (295,800)
  Proceeds from the issuance of common stock                                             --          --         3,192
  Proceeds from the issuance of treasury stock                                          3,237       7,943        --
  Purchase of treasury stock                                                             --       (59,720)    (10,943)
------------------------------------------------------------------------------------------------------------------------
  Net cash used by financing activities                                               (71,953)   (105,877)    (87,235)
------------------------------------------------------------------------------------------------------------------------
Net increase(decrease) in cash and cash equivalents                                     7,197      (5,811)        946
Cash and cash equivalents at beginning of period                                        7,409      13,220      12,274
------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                          $  14,606   $   7,409   $  13,220
========================================================================================================================
Supplemental Disclosure:
  Cash payments for income taxes, net                                               $  63,120   $  68,100   $  49,889
========================================================================================================================
  Cash payments for interest                                                        $  30,873   $  40,070   $  42,974
========================================================================================================================


See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

---------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                    Common       Paid-In   Retained    Treasury
                                                                          Stock        Capital   Earnings       Stock       Total
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>         <C>         <C>                    <C>
Balance December 31, 1997                                                $  52,003   $ 124,595   $ 146,724       --     $ 323,322

Net earnings                                                                                        97,938                 97,938
Common stock activity:
   Stock plans activity (Note 6)                                               274       2,918                              3,192
   Purchase of treasury stock
     - 525,000 shares                                                                                         (10,943)    (10,943)
---------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1998                                                   52,277     127,513     244,662    (10,943)    413,509

Net earnings                                                                                       111,910                111,910
Common stock activity:
  Stock plans activity (Note 6)                                                         (7,187)                15,685       8,498
  Purchase of treasury stock
    - 3,123,200 shares                                                                                        (59,720)    (59,720)
---------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1999                                                   52,277     120,326     356,572    (54,978)    474,197

Net earnings                                                                                       105,901                105,901
Common stock activity:
  Stock plans activity (Note 6)                                                         (1,966)                 5,773       3,807
---------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 2000                                                $  52,277   $ 118,360   $ 462,473  $ (49,205)  $ 583,905
=================================================================================================================================

 See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  (Dollars in thousands except per share data)

1.   The Company

     Furniture Brands International,  Inc. (referred to herein as the "Company")
is one of the largest home furniture  manufacturers in the United States. During
the year ended  December  31,  2000,  the  Company had three  primary  operating
subsidiaries:  Broyhill Furniture  Industries,  Inc.; Lane Furniture Industries,
Inc.; and Thomasville Furniture Industries, Inc.

     Substantially all of the Company's sales are made to unaffiliated furniture
retailers.  The Company has a  diversified  customer  base with no one  customer
accounting  for  10% or  more  of  consolidated  net  sales  and  no  particular
concentration of credit risk in one economic sector.  Foreign operations and net
sales are not material.

2.   Significant Accounting Policies

     The significant accounting policies of the Company are set forth below.

Use of Estimates

     The  preparation  of financial  statements  in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reported  period.  Actual results are likely to differ from
those estimates but management believes such differences are not significant.

Principles of Consolidation

     The consolidated  financial  statements include the accounts of the Company
and  all  of  its  subsidiaries.  All  material  intercompany  transactions  are
eliminated in consolidation.  The Company's fiscal year ends on December 31. The
operating  companies  included in the consolidated  financial  statements report
their  results  of  operations  as of  the  Saturday  closest  to  December  31.
Accordingly,  the  results of  operations  will  periodically  include a 53-week
fiscal year. Fiscal years 2000, 1999, and 1998 were 52-week years.

Cash and Cash Equivalents

     The Company considers all short-term  investments with an original maturity
of three  months  or less to be cash  equivalents.  Short-term  investments  are
recorded at amortized cost, which approximates market.

Inventories

     Inventories  are  stated  at the  lower of cost  (first-in,  first-out)  or
market.

Property, Plant and Equipment

     Property,   plant  and  equipment  are  recorded  at  cost  when  acquired.
Depreciation  is calculated  using both  accelerated and  straight-line  methods
based on the estimated  useful lives of the respective  assets,  which generally
range from 3 to 45 years for buildings and  improvements  and from 3 to 12 years
for machinery and equipment.


<PAGE>



Intangible Assets

     The  excess  of cost  over  net  assets  acquired  in  connection  with the
acquisition of  Thomasville  totaled  $93,110.  This  intangible  asset is being
amortized on a straight-line basis over a 40-year period.

     The Company  emerged  from  Chapter 11  reorganization  effective  with the
beginning of business on August 3, 1992. In accordance  with generally  accepted
accounting principles, the Company was required to adopt "fresh-start" reporting
which included  adjusting all assets and  liabilities to their fair values as of
the effective date. The ongoing impact of the adoption of fresh-start  reporting
is reflected in the financial statements for all years presented.

     As a  result  of  adopting  fresh-start  reporting,  the  Company  recorded
reorganization  value in excess of amounts  allocable to identifiable  assets of
approximately   $146,000.   This  intangible  asset  is  being  amortized  on  a
straight-line basis over a 20-year period.

     Also in connection with the adoption of fresh-start reporting,  the Company
recorded  approximately  $156,800  in fair value of  trademarks  and trade names
based upon an independent  appraisal.  Such trademarks and trade names are being
amortized on a straight-line basis over a 40-year period.

     Long-lived assets are reviewed for impairment whenever events or changes in
business  circumstances  indicate  the  carrying  value of the assets may not be
recoverable.  Impairment  losses are recognized if expected future cash flows of
the related assets are less than their carrying values.

Fair Value of Financial Instruments

     The Company  considers the carrying  amounts of cash and cash  equivalents,
receivables, and accounts payable to approximate fair value because of the short
maturity of these financial instruments.

     Amounts  outstanding  under  long-term debt agreements are considered to be
carried on the financial  statements at their estimated fair values because they
were entered  into  recently  and/or  accrue  interest at rates which  generally
fluctuate with interest rate trends.

Revenue Recognition

     The Company  recognizes  revenue  when  finished  goods are  shipped,  with
appropriate provisions for returns and uncollectible accounts.

Income Taxes

     Deferred tax assets and liabilities are recognized for the estimated future
tax  consequences  attributable to differences  between the financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
basis.  Deferred tax assets and liabilities are measured using enacted tax rates
in effect for the year in which those  temporary  differences are expected to be
recovered or settled. The effect of a change in tax rates on deferred tax assets
and  liabilities  is  recognized  in  income in the  period  that  includes  the
enactment date.

Stock-Based Compensation

     The Company accounts for stock-based compensation using the intrinsic value
method.
<TABLE>
<CAPTION>

3.   Inventories

                  Inventories are summarized as follows:

--------------------------------------------------------------------------------------------------------------------------
                                                                                December 31,                 December 31,
                                                                                       2000                         1999
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                          <C>
Finished products                                                                  $125,491                     $112,389
Work-in-process                                                                      61,932                       58,479
Raw materials                                                                       107,031                      114,527
--------------------------------------------------------------------------------------------------------------------------
                                                                                   $294,454                     $285,395
===========================================================================================================================
</TABLE>


<TABLE>
<CAPTION>
4.   Intangible Assets

                  Intangible assets include the following:

--------------------------------------------------------------------------------------------------------------------------
                                                                                December 31,                 December 31,
                                                                                       2000                         1999
--------------------------------------------------------------------------------------------------------------------------
Intangible assets, at cost:
   Reorganization value in excess of amounts
<S>                                                                                <C>                          <C>
     Allocable to identifiable assets                                              $146,063                     $146,063
   Trademarks and trade names                                                       156,828                      156,828
   Excess of cost over net assets acquired                                           93,110                       93,110
--------------------------------------------------------------------------------------------------------------------------
                                                                                    396,001                      396,001
   Less accumulated amortization                                                    106,106                       92,555
--------------------------------------------------------------------------------------------------------------------------
                                                                                   $289,895                     $303,446
==========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>

5.   Long-Term Debt

                  Long-term debt consists of the following:

--------------------------------------------------------------------------------------------------------------------------
                                                                                December 31,                 December 31,
                                                                                       2000                         1999
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                           <C>
Revolving credit facility (unsecured)                                             $ 446,000                     $    -
Secured credit agreement:
   Revolving credit facility                                                            -                        317,500
   Term loan facility                                                                   -                        200,000
Other                                                                                16,000                       17,600
--------------------------------------------------------------------------------------------------------------------------
                                                                                  $ 462,000                     $535,100
==========================================================================================================================
</TABLE>

     The following  discussion  summarizes  certain  provisions of the long-term
debt.

Revolving Credit Facility

     On June 7, 2000, the Company refinanced its secured credit agreement with a
group of financial  institutions.  The new facility is an unsecured,  five-year,
revolving  credit facility with a commitment of $630,000.  The revolving  credit
facility allows for issuance of letters of credit and cash borrowings. Letter of
credit  outstandings are limited to no more than $150,000,  with cash borrowings
limited  only by the  facility's  maximum  availability  less  letters of credit
outstanding.

     Currently,  for  letter  of  credit  issuances,  a fee of 0.75%  per  annum
(subject to  increase/decrease  based upon the Company  achieving certain credit
ratings  from  Standard & Poor's and Moody's) is assessed for the account of the
lenders  ratably.  A further  fee of 0.125% is  assessed  on standby  letters of
credit  representing  a  facing  fee.  A  customary  administrative  charge  for
processing  letters of credit is also  payable  to the  relevant  issuing  bank.
Letter of credit fees are payable quarterly in arrears.

     Cash borrowings under the revolving credit facility bear interest at a base
rate or at an adjusted  Eurodollar rate plus an applicable  margin which varies,
depending upon the type of loan the Company executes. The applicable margin over
the base rate and adjusted  Eurodollar rate is subject to adjustment  based upon
achieving certain credit ratings.  At December 31, 2000, loans outstanding under
the  revolving  credit  facility  consisted  of $435,000  based on the  adjusted
Eurodollar  rate and  $11,000  based on the base rate,  for a  weighted  average
interest rate of 7.61%.

     At December 31, 2000, there were $446,000 of cash borrowings and $35,994 in
letters of credit  outstanding  under the revolving credit facility,  leaving an
excess of $148,006 available under the facility.

     The revolving credit facility has no mandatory principal payments; however,
the  commitment  matures on June 7, 2005.  The facility  requires the Company to
meet certain financial covenants including a minimum  Consolidated Net Worth and
Leverage Ratio. In addition, the facility requires repayment upon the occurrence
of a Change of Control of the Company.


<PAGE>



Other

     Other  long-term  debt  consists of various  industrial  revenue bonds with
interest rates ranging from approximately 4.0% to 9.0%.

Interest Rate Swap Agreements

     The Company had entered into an interest rate swap  agreement to reduce the
impact of changes in interest rates on its floating rate long-term debt. In June
1999 and July  2000,  the  Company  executed  partial  unwinds of  $100,000  and
$200,000,  respectively,  of the $300,000 swap  agreement.  The gains from these
transactions  are being amortized over the original life of the swap which would
have matured in January 2002.

Other Information

     The Company has no mandatory  long-term  debt payments until 2005, at which
time $454,000 matures.

6.   Common Stock

     The Company's restated certificate of incorporation  includes authorization
to issue up to 100.0  million  shares  of  common  stock  with a $1.00 per share
stated value.  As of December 31, 2000,  52,277,066  shares of common stock were
issued.  It is not presently  anticipated  that dividends will be paid on common
stock in the foreseeable future.

     The Company has been authorized by its Board of Directors to repurchase its
common  stock  from  time  to  time  in  open  market  or  privately  negotiated
transactions. Common stock repurchases are recorded as treasury stock and may be
used for general corporate purposes.  In 1999, the Company repurchased 3,123,200
shares for $59,720. As of December 31, 2000, the Company has Board of Directors'
authorization for the repurchase of an additional $100,000 of its common stock.

     Shares of common stock were reserved for the following purposes at December
31, 2000:

                                                              Number of Shares
-------------------------------------------------------------------------------
Common stock options:
  Granted                                                            4,345,634
  Available for grant                                                1,707,115
-------------------------------------------------------------------------------
                                                                     6,052,749
===============================================================================

     On April 29, 1999, stockholders approved the 1999 Long-Term Incentive Plan.
The plan  provided for a total of  2,250,000  shares plus all  remaining  shares
available  for grant or which  become  available  for grant due to  cancellation
under the 1992 Stock  Option Plan.  The plan is  administered  by the  Executive
Compensation  and Stock Option  Committee of the Board of Directors  and permits
certain key  employees  to be granted  nonqualified  options,  performance-based
options,  restricted stock, or combinations  thereof.  Options must be issued at
market value on the date of grant and expire in a maximum of ten years.

     In 1999,  the  Company  granted  79,000  shares of  restricted  stock.  The
restricted  shares vest over  various  periods  from 2 to 5 years.  The deferred
compensation  expense  is  amortized  to  expense  over the  period  of time the
restrictions  are in  place  and the  unamortized  portion  is  classified  as a
reduction of paid-in-capital in the Company's consolidated balance sheets.


<PAGE>

<TABLE>
<CAPTION>

Changes in options granted and outstanding are summarized as follows:

------------------------------------ ------------------------------------------------------------------------------------
                                                                   Year Ended December 31,
                                     ------------------------------------------------------------------------------------
                                                 2000                         1999                       1998
                                     ---------------------------- --------------------------- ---------------------------
                                                         Average                     Average                     Average
                                            Shares         Price         Shares        Price       Shares          Price
                                     --------------- ------------ --------------- ----------- ------------- -------------
<S>                                      <C>              <C>         <C>             <C>       <C>               <C>
Beginning of period                      4,027,063        $12.67      4,018,581       $ 9.37    3,897,930         $ 7.48
Granted                                    734,600         16.70        772,600        23.49      436,500          23.02
Exercised                                 (305,300)         6.83       (662,141)        6.02     (273,546)          4.81
Cancelled                                 (110,729)        18.60       (101,977)        7.91      (42,303)          5.56
------------------------------------ --------------- ------------ --------------- ----------- ------------- -------------
End of period                            4,345,634        $13.61      4,027,063       $12.67     4,018,581        $ 9.37
==================================== =============== ============ =============== =========== ============= =============
Exercisable at
   end of period                         2,591,726                    2,342,822                 2,261,639
==================================== =============== ============ =============== =========== ============= =============
Weighted average fair
   value of options granted                               $ 9.52                      $13.03                      $11.04
==================================== =============== ============ =============== =========== ============= =============
</TABLE>

     Had compensation cost for the Company's stock-based  compensation plan been
determined  consistent  with SFAS No. 123,  the  Company's  net earnings and net
earnings per share would have been as follows:

<TABLE>
<CAPTION>
---------------------------------------------------- ---------------------------------------------------------------------
                                                                           Year Ended December 31,
                                                     ---------------------------------------------------------------------
                                                                       2000                   1999                   1998
---------------------------------------------------- ----------------------- ---------------------- ----------------------
Net earnings
<S>                                                                <C>                    <C>                     <C>
 As reported                                                       $105,901               $111,910                $97,938
 Pro forma                                                          101,819                108,600                 96,180

Net earnings per share - basic
 As reported                                                       $   2.14               $   2.20                $  1.88
 Pro forma                                                             2.06                   2.13                   1.85

Net earnings per share - diluted
 As reported                                                       $   2.10               $   2.14                $  1.82
 Pro forma                                                             2.05                   2.10                   1.80
==================================================== ======================= ====================== ======================
</TABLE>

     The weighted  average fair value of options  granted is estimated as of the
date of grant using the  Black-Scholes  option  pricing model with the following
weighted average assumptions: risk free interest rate of 5.70%, 5.00%, and 5.50%
in 2000,  1999, and 1998,  respectively;  expected  dividend yield of 0% for all
years;  expected  life of 7 years for all years and expected  volatility of 47%,
46%, and 35% for 2000, 1999, and 1998, respectively.

     Summarized  information regarding stock options outstanding and exercisable
at December 31, 2000 follows:
<TABLE>
<CAPTION>

----------------------- --------------------- ------------------ ---------------- ------ --------------------------------
                                                 Outstanding                                       Exercisable
                        --------------------- ------------------ ----------------        --------------------------------
Range of                                                Average
Exercise                                            Contractual          Average                                 Average
Prices                                Shares               Life            Price                  Shares           Price
----------------------- --------------------- ------------------ ---------------- ------ ---------------- ---------------
<S>   <C>                          <C>                      <C>           <C>                  <C>                <C>
Up to $10                          1,640,134                2.3           $ 5.61               1,549,725          $ 5.51
$10 - $20                          1,601,800                6.4            14.59                 681,900           12.83
Over $20                           1,103,700                6.7            24.09                 360,101           24.14
----------------------- --------------------- ------------------ ---------------- ------ ---------------- ---------------
                                   4,345,634                4.9           $13.61               2,591,726          $10.02
======================= ===================== ================== ================ ====== ================ ===============
</TABLE>

     Weighted  average  shares used in the  computation of basic and diluted net
earnings per common share for 2000, 1999, and 1998 are as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------- ----------------------------------------------------------
                                                                                 Year Ended December 31,
                                                                ----------------------------------------------------------
                                                                              2000                1999               1998
                                                                ------------------- ------------------- ------------------
Weighted average shares used for
<S>                                                                     <C>                 <C>                <C>
 basic net earnings per common share                                    49,531,931          50,967,973         52,095,451
Effect of dilutive securities:
 Stock options                                                             910,805           1,366,611          1,713,515
--------------------------------------------------------------- ------------------- ------------------- ------------------
Weighted average shares used for
 diluted net earnings per common share                                  50,442,736          52,334,584         53,808,966
=============================================================== =================== =================== ==================
</TABLE>

     Excluded from the computation of diluted net earnings per common share were
options to purchase 1,163,700 and 1,100,300 shares at an average price of $23.81
and $24.21 per share during 2000 and 1999, respectively.


<PAGE>



7.   Income Taxes

     Income tax expense was comprised of the following:

<TABLE>
<CAPTION>
---------------------------------- --------------------------------------------------------------------------------------
                                                                  Year Ended December 31,
                                   ---------------------------- ---------------------------- ----------------------------
                                                         2000                         1999                          1998
---------------------------------- ---------------------------- ---------------------------- ----------------------------
Current:
<S>                                                   <C>                          <C>                           <C>
 Federal                                              $55,191                      $62,108                       $46,257
 State and local                                        5,171                        8,136                         5,324
---------------------------------- ---------------------------- ---------------------------- ----------------------------
                                                       60,362                       70,244                        51,581
Deferred                                               (2,788)                      (5,390)                        2,624
---------------------------------- ---------------------------- ---------------------------- ----------------------------
                                                      $57,574                      $64,854                       $54,205
================================== ============================ ============================ ============================
</TABLE>

     The  following  table  reconciles  the  differences   between  the  federal
corporate statutory rate and the Company's effective income tax rate:
<TABLE>
<CAPTION>

==================================================================== =====================================================
                                                                                   Year Ended December 31,
                                                                     -----------------------------------------------------
                                                                               2000               1999              1998
-------------------------------------------------------------------- ----------------- ----------------- -----------------
<S>                                                                            <C>                <C>               <C>
Federal corporate statutory rate                                               35.0%              35.0%             35.0%
State and local income taxes, net of
  federal tax benefit                                                           1.7                2.5               1.8
Amortization of excess reorganization value                                     1.5                1.5               1.7
Dividend exclusion                                                             (1.1)                -               (1.2)
Other                                                                          (2.4)              (2.3)             (1.7)
-------------------------------------------------------------------- ----------------- ----------------- -----------------
Effective income tax rate                                                      34.7%              36.7%             35.6%
==================================================================== ================= ================= =================
</TABLE>

     The sources of the tax effects for temporary  differences that give rise to
the deferred tax assets and liabilities were as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------ ------------------------ -----------------------
                                                                                    December 31,            December 31,
                                                                                           2000                    1999
------------------------------------------------------------------------ ------------------------ -----------------------
Deferred tax assets attributable to:
<S>                                                                                    <C>                   <C>
 Expense accruals                                                                      $ 15,293              $   17,873
 Valuation reserves                                                                      11,811                  10,318
 Employee postretirement benefits
  other than pensions                                                                     2,855                   2,927
 Inventory costs capitalized                                                              1,560                   2,757
 Employee pension plans                                                                     750                   2,121
 Other                                                                                    2,805                   2,632
------------------------------------------------------------------------ ------------------------ -----------------------
  Total deferred tax assets                                                              35,074                  38,628
------------------------------------------------------------------------ ------------------------ -----------------------
Deferred tax liabilities attributable to:
 Fair value adjustments                                                                 (68,744)                (71,422)
 Depreciation                                                                            (8,099)                 (8,428)
 Fair market value adjustments -
  accounts receivable                                                                    (2,530)                 (5,060)
 Other                                                                                   (9,679)                (10,484)
------------------------------------------------------------------------ ------------------------ -----------------------
  Total deferred tax liabilities                                                        (89,052)                (95,394)
------------------------------------------------------------------------ ------------------------ -----------------------
  Net deferred tax liabilities                                                         $(53,978)               $(56,766)
======================================================================== ======================== =======================
</TABLE>

     The net deferred tax liabilities are included in the  consolidated  balance
sheets as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------ ------------------------ -----------------------
                                                                                    December 31,            December 31,
                                                                                           2000                    1999
------------------------------------------------------------------------ ------------------------ -----------------------
<S>                                                                                    <C>                     <C>
Prepaid expenses and other current assets                                              $ 23,555                $ 25,605
Other long-term liabilities                                                             (77,533)                (82,371)
------------------------------------------------------------------------ ------------------------ -----------------------
                                                                                       $(53,978)               $(56,766)
======================================================================== ======================== =======================
</TABLE>



<PAGE>



8.   Employee Benefits

     The  Company   sponsors  or  contributes   to  retirement   plans  covering
substantially  all  employees.  The total cost of all plans for 2000,  1999, and
1998 was $2,090, $5,649, and $7,773, respectively.

Company-Sponsored Defined Benefit Plans

     Annual cost for defined  benefit  plans is  determined  using the projected
unit credit actuarial method. Prior service cost is amortized on a straight-line
basis over the average remaining service period of employees expected to receive
benefits.

     It is the Company's  practice to fund pension costs to the extent that such
costs are tax deductible and in accordance with ERISA. The assets of the various
plans  include  corporate  equities,   government  securities,   corporate  debt
securities and insurance contracts. The table below summarizes the funded status
of the Company-sponsored defined benefit plans.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------- --------------------- ----------------------
                                                                                          December 31,           December 31,
                                                                                                 2000                   1999
--------------------------------------------------------------------------------- --------------------- ----------------------
Change in projected benefit obligation:
<S>                                                                                          <C>                    <C>
 Projected benefit obligation - beginning of year                                            $313,756               $284,498
 Service cost                                                                                   8,665                  8,379
 Interest cost                                                                                 22,522                 21,905
 Actuarial (gain) loss                                                                         (3,298)                17,204
 Benefits paid                                                                                (18,134)               (17,166)
 Other                                                                                            -                   (1,064)
--------------------------------------------------------------------------------- --------------------- ----------------------
   Projected benefit obligation - end of year                                                $323,511               $313,756
--------------------------------------------------------------------------------- --------------------- ----------------------
Change in plan assets:
 Fair value of plan assets - beginning of year                                               $361,890               $332,541
 Actual return on plan assets                                                                   9,402                 44,731
 Employer contributions                                                                         1,198                    687
 Benefits paid                                                                                (18,134)               (17,166)
 Other                                                                                            -                    1,097
--------------------------------------------------------------------------------- --------------------- ----------------------
   Fair value of plan assets - end of year                                                   $354,356               $361,890
--------------------------------------------------------------------------------- --------------------- ----------------------
 Funded status                                                                               $ 30,845               $ 48,134
 Unrecognized net gain                                                                        (26,807)               (49,006)
 Unrecognized prior service cost                                                                1,336                  1,480
--------------------------------------------------------------------------------- --------------------- ----------------------
   Prepaid pension cost                                                                      $  5,374               $    608
================================================================================= ===================== ======================
</TABLE>

Net  periodic  pension cost for 2000,  1999,  and 1998  included  the  following
components:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------- ----------------------------------------------
                                                                                        Year Ended December 31,
                                                                             ----------------------------------------------
                                                                                      2000           1999            1998
---------------------------------------------------------------------------- --------------- -------------- ---------------
<S>                                                                                <C>             <C>             <C>
Service cost-benefits earned during the period                                     $ 8,665         $8,379          $7,419
Interest cost on the projected benefit obligation                                   22,522         21,905          19,856
Expected return on plan assets                                                     (31,840)       (29,193)        (25,464)
Net amortization and deferral                                                       (2,914)        (1,230)           (224)
---------------------------------------------------------------------------- --------------- -------------- ---------------
Net periodic pension (income) expense                                              $(3,567)        $ (139)         $1,587
============================================================================ =============== ============== ===============
</TABLE>

     Employees are covered primarily by noncontributory plans, funded by Company
contributions to trust funds,  which are held for the sole benefit of employees.
Monthly  retirement  benefits  are based  upon  service  and pay with  employees
becoming vested upon completion of five years of service.

     The expected long-term rate of return on plan assets was 9.0% in 2000, 9.0%
in 1999 and 8.5% in 1998.  Measurement of the projected  benefit  obligation was
based upon a weighted  average  discount  rate of 7.25% and a long-term  rate of
compensation increase of 4.5% for all years presented.


<PAGE>



Other Retirement Plans and Benefits

     In addition to defined benefit plans,  the Company makes  contributions  to
defined  contribution  plans and sponsors  employee  savings plans.  The cost of
these plans is included in the total cost for all plans reflected above.

9.   Extraordinary Item - Early Extinguishment of Debt

     In  conjunction  with the June 7, 2000,  refinancing  of the Secured Credit
Agreement,  the Company charged to results of operations  $2,522,  net of income
tax expense of $1,520,  representing  the deferred  financing  fees and expenses
pertaining  to  the  refinanced   facility.   The  charge  was  recorded  as  an
extraordinary item.

10.  Commitments and Contingent Liabilities

     Certain of the Company's  real  properties and equipment are operated under
lease  agreements.  Rental  expense  under  operating  leases  totaled  $18,514,
$17,417,  and $16,537 for 2000,  1999,  and 1998,  respectively.  Annual minimum
payments under  operating  leases are $15,639,  $13,769,  $11,949,  $9,795,  and
$5,817 for 2001 through 2005, respectively.  Future minimum lease payments under
operating  leases,  reduced  by  minimum  rentals  from  subleases  of $1,802 at
December 31, 2000, aggregate $80,892.

     The Company has  provided  guarantees  related to store  leases for certain
independent  dealers opening  Thomasville  Home  Furnishings  Stores.  The total
future lease payments guaranteed at December 31, 2000 were $49,469.  The Company
believes the risk of significant loss from these lease guarantees is remote.

     The  Company  is or may  become a  defendant  in a  number  of  pending  or
threatened legal proceedings in the ordinary course of business.  In the opinion
of  management,  the  ultimate  liability,  if any, of the Company from all such
proceedings  will not  have a  material  adverse  effect  upon the  consolidated
financial position or results of operations of the Company and its subsidiaries.


<PAGE>



11.   Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>

     Following is a summary of unaudited quarterly information:

------------------------------------------------------ ---------------- --------------- ----------------- ----------------
                                                                Fourth           Third           Second             First
                                                               Quarter         Quarter          Quarter           Quarter
------------------------------------------------------ ---------------- --------------- ----------------- ----------------
Year ended December 31, 2000:
<S>                                                           <C>             <C>              <C>               <C>
  Net sales                                                   $519,467        $499,746         $533,079          $563,947
  Gross profit                                                 130,066         126,812          141,547           148,434
  Net earnings:
    Earnings before extraordinary item                          24,307          23,373           30,143            30,600
    Extraordinary item                                             -               -             (2,522)              -
    Total                                                     $ 24,307        $ 23,373         $ 27,621          $ 30,600

  Net earnings per common share -    basic:
    Earnings before extraordinary item                        $   0.49        $   0.47         $   0.61          $   0.62
    Extraordinary item                                             -               -              (0.05)              -
    Total                                                     $   0.49        $   0.47         $   0.56          $   0.62

  Net earnings per common share-     diluted:
    Earnings before extraordinary item                        $   0.48        $   0.46         $   0.60          $   0.61
    Extraordinary item                                             -               -              (0.05)              -
    Total                                                     $   0.48        $   0.46         $   0.55          $   0.61

Common stock price range:
    High                                                      $  21.69        $  18.56         $  21.69          $  19.69
    Low                                                       $  14.94        $  14.06         $  14.25          $  14.56
====================================================== ================ =============== ================= ================
Year ended December 31, 1999:

  Net sales                                                   $521,169        $512,980         $520,061          $533,902
  Gross profit                                                 135,706         134,679          138,236           141,691
  Net earnings                                                $ 29,151        $ 27,460         $ 27,592          $ 27,707

  Net earnings per common share:

    Basic                                                     $   0.59        $   0.53         $   0.54          $   0.54
    Diluted                                                   $   0.58        $   0.52         $   0.52          $   0.52

Common stock price range:

  High                                                        $  22.00          $27.50         $  27.88          $  27.88
  Low                                                         $  17.44          $17.06         $  19.63          $  20.94
====================================================== ================ =============== ================= ================
</TABLE>

Net earnings in the fourth  quarter 2000 includes two  nonrecurring  items that,
after taking into account the impact of income taxes,  substantially offset each
other.  The  first  was a  $7,643  cash  dividend  from the  Company's  minority
investment in a company which leases exhibition space to furniture and accessory
manufacturers.  This offset a $10,575 increase in bad debt expense  attributable
to the recent failures of several large customers.

The Company has not paid cash  dividends  on its common  stock  during the three
years ended December 31, 2000. The closing market price of the Company's  common
stock on December 31, 2000 was $21.06 per share.


<PAGE>


                                    PART III
                                    --------

Item 10. Directors and Executive Officers of the Registrant

     The sections  entitled  "Nominees" and "Section 16(a) Beneficial  Ownership
Reporting Compliance" of the Company's Definitive Proxy Statement for the Annual
Meeting of Stockholders on April 26, 2001 are incorporated herein by reference.

Executive Officers of the Registrant
<TABLE>
<CAPTION>


                                                                                   Current    Appointed
         Name             Age       Position                                     Positions   or Elected
         ----             ---       --------                                     ---------   ----------

<S>                        <C>      <C>                                             <C>         <C>
*Wilbert G. Holliman       63       President of the Subsidiary -
                                     Action Industries, Inc.                                     1989
                                    Chief Executive Officer of
                                     the Subsidiary - Action
                                     Industries, Inc.                                            1994
                                    Director                                         X           1996
                                    President                                        X           1996
                                    Chief Executive Officer                          X           1996
                                    Chairman of the Board                            X           1998

 John T. Foy               53       President and Chief Executive
                                     Officer of the Subsidiary -
                                     Action Industries, Inc.                         X           1996

 Christian J. Pfaff        52       President and Chief Executive
                                     Officer of the Subsidiary -
                                     Thomasville Furniture Industries, Inc.          X           1997

 Dennis R. Burgette        53       President and Chief Executive
                                     Officer of the Subsidiary -
                                     Broyhill Furniture Industries, Inc.             X           2000

 Lynn Chipperfield         49       General Counsel                                              1993
                                    Vice-President                                               1996
                                    Secretary                                        X           1996
                                    Senior Vice President                            X           2000
                                    Chief Administrative Officer                     X           2000

 David P. Howard           50       Controller                                                   1990
                                    Vice-President                                   X           1991
                                    Chief Financial Officer                          X           1994
                                    Treasurer                                        X           1996

 Steven W. Alstadt         46       Controller                                       X           1994
                                    Chief Accounting Officer                         X           1994
-------------------------

* Member of the Executive Committee
</TABLE>


<PAGE>



There are no family  relationships  between any of the executive officers of the
Registrant.

The executive officers are elected at the organizational meeting of the Board of
Directors  which follows the annual  meeting of  stockholders  and serve for one
year and until their successors are elected and qualified.

Each of the  executive  officers has held the same  position or other  positions
with the same employer during the past five years.

Item 11.  Executive Compensation
--------  ----------------------

         The sections entitled "Executive Compensation", "Executive Compensation
and Stock  Option  Committee  Report on Executive  Compensation",  "Compensation
Committee Interlocks and Insider  Participation",  "Stock Options",  "Retirement
Plans",   "Incentive  Agreements"  and  "Performance  Graph"  of  the  Company's
Definitive  Proxy  Statement for the Annual Meeting of Stockholders on April 26,
2001 are incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
--------  --------------------------------------------------------------

         The section entitled "Security  Ownership" of the Company's  Definitive
Proxy  Statement for the Annual  Meeting of  Stockholders  on April 26, 2001, is
incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

         None.



<PAGE>



                                     PART IV
                                     -------

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
------------------------------------------------------------------------


(a)      List of documents filed as part of this report:

         1.    Financial Statements:

               Consolidated balance sheets, December 31, 2000 and 1999

               Consolidated  statements of  operations  for each of the years in
               the three-year period ended December 31, 2000

               Consolidated  statements  of cash  flows for each of the years in
               the three-year period ended December 31, 2000

               Consolidated  statements of shareholders'  equity for each of the
               years in the three-year period ended December 31, 2000

               Notes to consolidated financial statements

               Independent Auditors' Report

         2.    Financial Statement Schedules:

               Valuation and qualifying accounts (Schedule II).

All other schedules are omitted as the required  information is presented in the
consolidated financial statements or related notes or are not applicable.

         3.    Exhibits:

               3(a) Restated  Certificate of  Incorporation  of the Company,  as
                    amended.  (Incorporated  by  reference  to  Exhibit  3(a) to
                    Furniture Brands  International,  Inc.'s Quarterly Report on
                    Form 10-Q for the quarter ended September 30, 1996.)

               3(b) By-Laws of the  Company  revised and amended to May 6, 1998.
                    (Incorporated  by  reference  to Exhibit  3(a) to  Furniture
                    Brands  International,  Inc.'s Quarterly Report on Form 10-Q
                    for the quarter ended March 31, 1998.)

               3(c) Rights  Agreement,  dated as of July 30,  1998,  between the
                    Company and Bank of New York, as Rights Agent. (Incorporated
                    by   reference   to  Exhibit   4(b)  to   Furniture   Brands
                    International,  Inc.'s Quarterly report on Form 10-Q for the
                    quarter ended June 30, 1998.)

               3(d) Certificate  of  Designations,  Preferences  and  Rights  of
                    Series  A  Junior  Participating   Preferred  Stock  of  the
                    Company.  (Incorporated  by  reference  to  Exhibit  4(c) to
                    Furniture Brands  International,  Inc.'s Report on Form 10-Q
                    for the quarter ended June 30, 1998.)

               4(a) Credit  Agreement,  dated  as of June  7,  2000,  among  the
                    Company, Broyhill Furniture Industries, Inc., Lane Furniture
                    Industries,  Inc.,  Thomasville Furniture Industries,  Inc.,
                    Various Lenders, First Union National Bank, as Documentation
                    Agent,  Bank of  America,  N.A.,  as  Syndication  Agent and
                    Deutsche Bank AG, New York Branch, as Administrative  Agent.
                    (Incorporated  by  reference  to Exhibit  4(a) to  Furniture
                    Brands  International,  Inc.'s Quarterly Report on Form 10-Q
                    for the quarter ended June 30, 2000.)

               4(b) Agreement to furnish upon request of the  Commission  copies
                    of other  instruments  defining  the  rights of  holders  of
                    long-term  debt of the  Company and its  subsidiaries  which
                    debt does not exceed 10% of the total  assets of the Company
                    and its subsidiaries on a consolidated basis.  (Incorporated
                    by   reference   to  Exhibit   4(c)  to   Furniture   Brands
                    International,  Inc.'s  Annual  Report  on Form 10-K for the
                    year ended February 28, 1981.)

               10(a)Furniture  Brands  International,  Inc.'s 1992 Stock  Option
                    Plan,  as amended.  (Incorporated  by  reference  to Exhibit
                    10(a) to Furniture  Brands  International,  Inc.'s Form 10-Q
                    for the quarter ended March 31, 1999.)

               10(b)Furniture   Brands   International   Inc.'s  2000  Long-Term
                    Incentive Plan  (Incorporated  by reference to Exhibit 10(b)
                    to Furniture Brands  International,  Inc.'s Quarterly Report
                    on Form 10-Q for the quarter ended March 31, 1999.)

               10(c)Form of  Indemnification  Agreement  between the Company and
                    Richard B. Loynd,  Donald E.  Lasater  and Lee M.  Liberman.
                    (Incorporated  by  reference  to Exhibit  10(h) to Furniture
                    Brands International,  Inc.'s Annual Report on Form 10-K for
                    the year ended February 29, 1988.)

               10(d)Written  description of bonus plan for management  personnel
                    of  The  Lane  Company,   Incorporated.   (Incorporated   by
                    reference   to   Exhibit    10(e)   to   Furniture    Brands
                    International,  Inc.'s  Annual  Report  on Form 10-K for the
                    year ended December 31, 1995.)

               10(e)Retirement  Plan for directors.  (Incorporated  by reference
                    to Exhibit 10(g) to Furniture Brands  International,  Inc.'s
                    Annual  Report on Form 10-K for the year ended  December 31,
                    1994.)

               10(f)First   Amendment   to   Retirement   Plan  for   Directors.
                    (Incorporated  by  reference  to Exhibit  10(e) to Furniture
                    Brands International,  Inc.'s Annual Report on Form 10-K for
                    the year ended December 31, 1997.)

               10(g)Furniture Brands  International,  Inc.  Executive  Incentive
                    Plan,  as amended.  (Incorporated  by  reference  to Exhibit
                    10(g)  to  Furniture  Brands  International,  Inc.'s  Annual
                    Report on Form 10-K for the year ended December 31, 1999.)

               10(h)Broyhill  Furniture  Industries,  Inc.  Executive  Incentive
                    Plan.   (Incorporated  by  reference  to  Exhibit  10(i)  to
                    Furniture Brands International, Inc.'s Annual Report on Form
                    10-K for the year ended December 31, 1994.)

               10(i)Thomasville Furniture  Industries,  Inc. Executive Incentive
                    Plan   (Incorporated   by  reference  to  Exhibit  10(j)  to
                    Furniture Brands International, Inc.'s Annual Report on Form
                    10-K for the year ended December 31, 1996.)

               10(j)Employment  Agreement,  dated as of April 29, 1997,  between
                    Action  Industries,  Inc. and John T. Foy.  (Incorporated by
                    reference to Exhibit 10(d) to Furniture Brands International
                    Inc.'s  Quarterly  Report on Form 10-Q for the quarter ended
                    March 31, 1997.)

               10(k)Employment  Agreement,  dated as of January 1, 1999, between
                    the  Company  and  Wilbert  G.  Holliman.  (Incorporated  by
                    reference   to   Exhibit    10(j)   to   Furniture    Brands
                    International,  Inc.'s  Annual  Report  on Form 10-K for the
                    year ended December 31, 1998.)

               10(l)Employment  Agreement,  dated as of August 1, 1996,  between
                    the  Company  and  Lynn   Chipperfield.   (Incorporated   by
                    reference to Exhibit 10(c) to Furniture Brands International
                    Inc.'s  Quarterly  Report on Form 10-Q for the quarter ended
                    September 30, 1996.)

               10(m)Employment  Agreement,  dated as of August 1, 1996,  between
                    the Company and David P. Howard.  (Incorporated by reference
                    to Exhibit 10(d) to Furniture  Brands  International  Inc.'s
                    Quarterly   Report  on  Form  10-Q  for  the  quarter  ended
                    September 30, 1996.)

               10(n)Employment  Agreement,  dated as of January 1, 2000  between
                    the Company and Richard B. Loynd. (Incorporated by reference
                    to Exhibit 10(n) to Furniture Brands  International,  Inc.'s
                    Annual  Report on Form 10-K for the year ended  December 31,
                    1999.)

               10(o)Employment Agreement,  dated as of January 29, 1998, between
                    Thomasville  Furniture  Industries,  Inc.  and  Christian J.
                    Pfaff.  (Incorporated  by  reference  to  Exhibit  10(o)  to
                    Furniture Brands  International Inc.'s Annual Report on Form
                    10-K for the year ended December 31, 1997.)

               10(p)Employment  Agreement,  dated as of January 1, 1999, between
                    Broyhill Furniture Industries,  Inc. and Dennis R. Burgette.
                    (Incorporated  by  reference  to Exhibit  10(p) to Furniture
                    Brands  International,  Inc's Annual Report on Form 10-K for
                    the year ended December 31, 1998.)

               10(q)Form of  Agreement  Not To Compete  between  the Company and
                    Wilbert  G.  Holliman,  Dennis  R.  Burgette,  John T.  Foy,
                    Christian J. Pfaff,  David P. Howard,  Lynn Chipperfield and
                    Steven W.  Alstadt.  (Incorporated  by  reference to Exhibit
                    10(r)  to  Furniture  Brands  International,  Inc.'s  Annual
                    Report on Form 10-K for the year ended December 31, 1998.)

               21   List of Subsidiaries of the Company

               23   Consent of KPMG LLP

               99(a)Distribution  and  Services  Agreement,  dated  November 17,
                    1994, between the Company and Converse Inc. (Incorporated by
                    reference   to   Exhibit    99(a)   to   Furniture    Brands
                    International,  Inc.'s  Annual  Report  on Form  8-K,  dated
                    December 2, 1994.)

               99(b)Tax Sharing Agreement,  dated November 17, 1994, between the
                    Company and  Converse  Inc.  (Incorporated  by  reference to
                    Exhibit  99(b) to  Furniture  Brands  International,  Inc.'s
                    Annual Report on Form 8-K, dated December 2, 1994.)

               99(c)Amendment  to Tax  Sharing  Agreement,  dated as of February
                    21,   1996,   between   the  Company   and   Converse   Inc.
                    (Incorporated  by  reference  to Exhibit  99(e) to Furniture
                    Brands International,  Inc.'s Annual Report on Form 10-K for
                    the year ended December 31, 1996.)

(b)  Reports on Form 8-K.

     A Form 8-K was filed on December 15, 2000 announcing  projections of fourth
     quarter  sales and  earnings.  A Form 8-K was  filed on  January  25,  2001
     announcing  fourth  quarter  operating  results and a Form 8-K was filed on
     February  23,  2001  announcing  projections  of first  quarter  sales  and
     earnings.

     SHAREHOLDERS  REQUESTING  COPIES OF  EXHIBITS TO FORM 10-K WILL BE SUPPLIED
     ANY OR ALL SUCH EXHIBITS AT A CHARGE OF TEN CENTS PER PAGE.


<PAGE>



              FURNITURE BRANDS INTERNATIONAL, INC. AND SUBSIDIARIES

             Index to Consolidated Financial Statements and Schedule

                                                                          Page
                                                                           No.
                                                                          ----
Consolidated Financial Statements:

  Consolidated Balance Sheets as of December 31, 2000 and 1999              17

  Consolidated Statements of Operations for each of the years in the three- 18
    year period ended December 31, 2000

  Consolidated Statements of Cash Flows for each of the years in the three- 19
    year period ended December 31, 2000

  Consolidated Statements of Shareholders' Equity for each of the years in  20
    the three-year period ended December 31, 2000

  Notes to Consolidated Financial Statements                                21

  Financial Statement Schedule                                              32

  Independent Auditors' Report                                              37

Consolidated Financial Statement Schedules:
                                                           Schedule
  Valuation and qualifying accounts                          II             36



<PAGE>

<TABLE>
<CAPTION>


                                                                                                        Schedule II

              FURNITURE BRANDS INTERNATIONAL, INC. AND SUBSIDIARIES
                        Valuation and Qualifying Accounts

                                                                            (Dollars in Thousands)
                                                     ---------------------------------------------------------------------
                                                                          Additions
                                                      Balance at         Charged to        Deductions         Balance at
                                                       Beginning          Costs and              from             End of
Description                                            of Period           Expenses          Reserves             Period

Year Ended  December 31, 2000
  Allowances  deducted from  receivables on balance
     sheet:
<S>                                                      <C>                <C>           <C>                    <C>
         Allowance for doubtful accounts                 $15,960            $12,002        $(10,056)(a)         $17,906
         Allowance for cash discounts/
           chargebacks/other                               3,097              3,470          (1,398)(b)           5,169
                                                         -------            -------        --------             -------
                                                         $19,057            $15,472        $(11,454)            $23,075
                                                         =======            =======        ========             =======

Year Ended  December 31, 1999
  Allowances  deducted from  receivables on balance
     sheet:
         Allowance for doubtful accounts                 $15,293            $ 2,362         $(1,695)(a)         $15,960
         Allowance for cash discounts/
           chargebacks/other                               3,040              1,364          (1,307)(b)           3,097
                                                         -------            -------         --------            -------
                                                         $18,333            $ 3,726         $(3,002)            $19,057
                                                         =======            =======         ========            =======

Year Ended  December 31, 1998
  Allowances  deducted from  receivables on balance
     sheet:
         Allowance for doubtful accounts                 $11,765            $ 5,054         $ (1,526)(a)        $15,293
         Allowance for cash discounts/
           chargebacks                                     2,028              1,555             (543)(b)          3,040
                                                         -------            -------         --------            -------
                                                         $13,793            $ 6,609         $ (2,069)           $18,333
                                                         =======            =======         ========            =======



(a)      Uncollectible accounts written off, net of recoveries.
(b)      Cash discounts taken by customers and claims allowed to customers.


See accompanying independent auditors' report.
</TABLE>


<PAGE>


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Furniture Brands International, Inc.:

     We have audited the accompanying  consolidated  balance sheets of Furniture
Brands  International,  Inc. and  subsidiaries as of December 31, 2000 and 1999,
and the related  consolidated  statements of operations,  shareholders'  equity,
cash flows and the related financial statement schedule for each of the years in
the three-year  period ended  December 31, 2000.  These  consolidated  financial
statements  and  financial  statement  schedule  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated  financial statements and financial statement schedule based on our
audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial  position of Furniture
Brands  International,  Inc. and  subsidiaries as of December 31, 2000 and 1999,
and the results of their  operations  and their cash flows for each of the years
in the three-year  period ended December 31, 2000, in conformity with accounting
principles  generally  accepted  in the United  States of  America.  Also in our
opinion,  the related financial statement schedule,  when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.

                                                       KPMG LLP





St. Louis, Missouri
January 25, 2001



<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                            Furniture Brands International, Inc.
                                                    (Registrant)


                                            By  Wilbert G. Holliman
                                                ------------------------
                                                Wilbert G. Holliman
                                                 Chairman of the Board,
                                                 President and Chief
                                                 Executive Officer

Date:  March 29, 2001


     Pursuant to the  requirement of the Securities  Exchange Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated on March 29, 2001.

           Signature                                      Title
           ---------                                      -----

/s/ Wilbert G. Holliman                             President and Director
-----------------------------                      (Principal Executive Officer)


/s/ Katherine Button Bell                           Director
-----------------------------

/s/ Bruce A. Karsh                                  Director
-----------------------------

/s/ Donald E. Lasater                               Director
-----------------------------

/s/ Lee M. Liberman                                 Director
-----------------------------

/s/ Richard B. Loynd                                Director
-----------------------------

/s/ Malcolm Portera                                 Director
-----------------------------

/s/ Albert E. Suter                                 Director
-----------------------------


<PAGE>



       Signature                                      Title
       ---------                                      -----

/s/ David P. Howard                                Vice-President and Treasurer
-----------------------------                     (Principal Financial Officer)


/s/ Steven W. Alstadt                              Controller
-----------------------------                     (Principal Accounting Officer)

<PAGE>